After Obtaining an Understanding of the Entity's Internal Control and Assessing

question 40

Multiple Choice

After obtaining an understanding of the entity's internal control and assessing control risk, an auditor of a non-public company decided not to perform additional tests of controls. The auditor most likely concluded that the:

• A)additional evidence to support a further reduction in control risk was not cost beneficial.
• B)assessed level of inherent risk exceeded the assessed level of control risk.
• C)internal control structure was properly designed and justifiably may be relied on.
• D)evidence obtainable through tests of controls would not support an increased level of control risk.

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Definitions:

Cumulative Net Profit

The aggregate profit that a business has generated over time, deducting all operational expenses, taxes, and costs.

Forecast Chart

A graphical representation used in analysis to display the predicted values of a variable over time, helping in planning and decision-making.

Certainty Level

The degree of confidence associated with a specific outcome or prediction, often quantified as a probability.

Probability Interval

A range within which a particular probability event is expected to lie, giving a certain level of confidence.